Until 11:11am, the day may well have been about the fairly tepid reaction to stronger economic data. Treasuries had traded a super narrow range overnight, resulting in unchanged levels at the open for themselves and MBS. Jobless Claims were lower than expected and Retail Sales didn't have much to say, coming in just slightly stronger, but with even bigger negative revisions.
Bond markets weakened just a bit, but held their ground quite well. MBS never came close to revisiting yesterday's opening levels and Treasuries put in a good supportive bounce right in line with yesterday's high yields.
Then the headlines hit.
11:11 - U.S. SECRETARY OF STATE KERRY SAYS IF REFERENDUM ON UKRAINE'S CRIMEA GOES AHEAD, THERE WILL BE A 'SERIOUS SERIES OF STEPS' ON MONDAY FROM U.S. AND EUROPE AGAINST RUSSIA
11:27 - KERRY: THERE ARE CONTINGENCIES IN PLACE IN CASE RUSSIAN FORCES MOVE FARTHER EAST INTO UKRAINE, HOPES TO AVOID THAT BUT 'NO TELLING THAT WE CAN'
Markets reacted noticeably, and were potentially already on edge about this weekend's referendum. Both MBS and Treasuries surged to the best levels of the week, with the gains helping Treasuries particularly as they triggered further short-covering. We've already seen quote a few positive reprices and will likely see more this afternoon.
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